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The Year of the Dragon: Part 2

The Year of the Dragon - Part 2: APRIL in May

This past May 31, I had the distinct pleasure of meeting with personnel from APRIL's pulp mill in Rizhao, Shandong Province, China.

First Impressions. From the moment you walk in the corporate office building you realize that you are in the presence of greatness. The corporate story is told electronically in a wrap-around room complete with special effects that would make Walt Disney take notice.

History. According to A.J. Devanesan, president/COO, "this mill at one time was state owned. Other major paper companies had looked at the mill and actually considered buying it over a five year period. With no offers in hand, my sales director visited the mill and came back to me and told me that I should take a look at it. I asked how much money were they asking, and he said book value. My chairman said it's a deal."

After the quick decision to purchase the mill, it took 1.5 years to complete the transaction. APRIL has owned the mill since August 2005.

Capacity. The Rizhao mill currently produces nearly 1.5 million metric tons of pulp each year. On May 31, it hit its second largest production month with 125,000 metric tons. Its very best production month was 140,000 metric tons The mill has the capacity to produce 2 million metric tpy.

Equipment. The mill makes all of its bleaching chemicals on-site for its four-stage bleaching process. It has a 5,210 metric ton digester for acacia, two twin-wire pulp dryers capable of handling 2,800 metric tons each, and a 7,200 metric ton recovery boiler.

Feedstock. For the most part, the mill uses acacia and eucalyptus chips sourced from China, Thailand, Australia, Malaysia, Vietnam, and Indonesia. Cost and yield are key drivers for the mix.

The mill's current effluent COD is between 60-70 mg/l, with plans to reduce it to 50 mg/l. Keep in mind that the standard in China is 100 mg/l.

Logistics. A.J. Devanesan has a chemical engineering background and is a fellow of the Wharton Business School. APRIL has studied the Japanese and Korean port based Industries and fashioned this mill to be port-based instead of forest-based.

The chips arrive in ships and guess who owns the ships? APRIL. The company currently has 7-8 custom built ships and has 12 more in the pipeline.

Environmental. APRIL does not build to national environmental standards. It takes the best worldwide standards and beats them by 10%. The company plans ahead and allocates a very large budget on environmental protection.

Future Plans. APRIL is a veryprudent company. It has faced financial crisis in the past, and so does not want to overstep its own capacity. The company may expand in pulp in the future, however. It is currently looking at downstream expansion into liquid packaging, board, and tissue as sustainable and long term product lines, in the form of a board and tissue machine. The company plans to keep building to meet requirements of outside and internal integration.

APRIL is building capacity primarily for the China market. It currently is at 45% capacity versus Chinese market pulp demand in China. It may export within a regional area or even the West Coast of the U.S. In Indonesia it is building capacity for export.

The two largest pulp mills in the world are in China. One is owned by APP and the other is owned by APRIL. Many smaller mills have been shut down in China—it looks like bigger is better, as they say. Some 85% of the world's new paper products capacity has been in China for the past several years. The average person in China uses 35-40 kilos of paper per year. Right now, China is a net exporter of paper.

Currently, the U.S. still has more natural resources than China. However, globally, more than 200 million trees are planted each year by the APRIL group. This means that those countries planting trees today will assure their own raw materials in the future.

APRIL is a firm believer in plantations. It is committed to planting trees, and believes that it will be a leader in our industry for a long time to come.

When it rains, it pours… or does it? During TAPPI’s recent, very successful, PEERS and IBBC conferences in Tacoma, WA, we had over 400 people registered. There were representatives from 14 countries who attended these meetings. Three of